Fanatics has acquired Water Street Labs and CX Clearinghouse from BGC Parties, gaining direct control of federally regulated infrastructure for prediction markets. The two entities are registered with the Commodity Futures Trading Commission: Water Street Labs as a designated contract market and CX Clearinghouse as a derivatives clearing organization, according to the announcement.
Fanatics, the sports betting and iGaming operator, has moved to own the rails that execute event-based trades rather than operate as a tenant on exchanges run by third parties. The acquisition consolidates the prediction market stack under one operator at a moment when event contracts are expanding beyond crypto into traditional sports and financial markets. BGC will continue to operate a partnership with the Fanatics entities on prediction markets post-sale, the announcement states.
Water Street Labs hosts order matching and execution for event contracts tied to sports outcomes, election results, and other discrete events. CX Clearinghouse handles settlement, collateral management, and counterparty risk for trades cleared through the system. Both entities sit at the core of U.S. prediction market infrastructure, a regulatory category that crystallized after the CFTC formally authorized contracts on event outcomes in 2023.
Fanatics operates DraftKings and FanDuel's primary competitor in sports betting. The company has moved into prediction markets as the category has drawn institutional trading firms, traditional hedge funds, and retail participants. Event contract platforms like Polymarket have accumulated hundreds of millions in volume since the CFTC clarification, though most remain offshore and unregistered with U.S. authorities.
Owning a registered DCM and DCO gives Fanatics the ability to list new event contracts, set margin requirements, and capture clearing fees directly. The infrastructure sits outside the offshore prediction market ecosystem and subjects Fanatics to CFTC oversight, financial reporting, and audit requirements in exchange for direct market control and the regulatory credential needed to attract institutional liquidity.
The deal arrives as traditional finance has begun competing for event contract volume. CME Group, the largest derivatives exchange operator, launched event contracts in 2023 and has expanded offerings on elections and sports. Kalshi, a CFTC-registered event contract platform, has grown to billions in quarterly volume on political and electoral events.
Fanatics does not disclose the purchase price or financial terms of the acquisition. BGC said the deal strengthens its partnership with Fanatics on prediction markets but did not elaborate on the structure or timeline for integration.
